Beat crisis, face slight recession, Başçı says

ANKARA - Hürriyet Daily News

The overall impact of fiscal and monetary policy will be to ease inflation, according to Erdem Başçı (L). The country’s current account gap is narrowing, he also says.
Should policymakers and political leaders in the European Union be successful in efforts to prevent markets and consumption from depressing, the world will face just a slight recession in 2012, Turkey’s Central Bank Gov. Erdem Başçı told top executives in Ankara yesterday.
Indicators from surveys on 2012 with managers in the EU are slightly below 50 compared to their maximum value of 100, Başçı said, Anatolia news agency reported yesterday.
“This indicates a slight recession [in 2012]. Could this be the beginning of a much larger problem? It is early to conclude this. Everyone is working to prevent degradation of this concern. If [policymakers and political leaders] are successful, this will only turn out to be a light recession,” the governor said.
In contrast to most advanced economies, developing countries applied tightening monetary and fiscal policy to address the crisis, Başçı said, adding that the “foundations of the [developing] countries are thus stronger.”

Fight against inflation
The overall impact of Turkish fiscal and monetary policy will be to ease inflation, Başçı said. Fiscal policy is neutral, and while the benchmark rate is expansionary, steps to tighten market liquidity are sufficient to rein in inflation, he said, Bloomberg News reported yesterday.
Başçı also said Turkey’s current account deficit will narrow in the last months of this year and the quality of financing the trade gap was improving.